Questions and Answers of Accounting Business Reporting For Decision

How can the margin of safety be used to assess risk associated with sales?
Explain the difference between mixed and variable costs. Provide examples of each.
Glenn Stone, manager of Jarrett Car Repairers, has requested that you prepare a cash budget for the months of December and January. He has provided the following information to assist in this
Swinton Industries operates in the IT industry, producing and selling computer and IT equipment. It is structured along functional lines (research and design, production, marketing and so on) and,
According to Telstra’s 2018 Remuneration report, 40 per cent of the executive variable remuneration plan (EVP) was based on customer performance measures. Discuss the reasons why the board has
Chalkboard was commenced by Louis Turner. Chalkboard is an innovative technology company that provides a platform for the posting of best-practice teaching videos and commentary. Its strategy is
Golden Arbours intends to start business on the first day of January. Production plans for its first four months of operations are as follows.Each unit requires 2 kilograms of material. The firm
Holiday Manor has a dining room with the capacity to seat 100 guests. It is open for breakfast and lunch seven days a week. During January 2019, management forecast the seat turnover for breakfast to
Database Service’s management expressed surprise that the budgeted profit was achieved despite actual sales being under by $75000. Give reasons why the actual profit may have been able to match the
Lavender Plantations Pty Limited produces and sells two types of lavender-based products: soaps and candles. The 2022 sales budget for the two products is as follows.The beginning inventory on 1
Brodie Ltd has undertaken its budget planning for the coming accounting period.RequiredPrepare a budgeted statement of profit or loss for the coming accounting period. Budget item Sales Cost of
Mona Little, the accountant for Trailers 4 Hire, is currently preparing the budget for the coming year. One of the agenda items for next week’s finance meeting is consideration of whether an
Garden Sculptures presents the following data relating to the expected operations for the months of January to March 2021.Required(a) Prepare a cash budget on a monthly basis for the three months
Dairy Australia Ltd’s annual operating plan for 2017–2018 outlines its three-year plan following revision of its strategic direction. Access the plan (available at www.dairyaustralia.com.au) and
Johnny Castles is the operational manager for Tru Blue Tours. Johnny’s bonus is dependent upon the reduction of his department’s operating expense budget by 10 per cent in the coming year. One
Michael Wallis is the marketing manager for a chain of stores specialising in electric tools for home renovators. Michael’s department is preparing a sales budget for the coming year and he has
Glenvale Furniture has projected sales of its product for the next six months as follows.The product sells for $120, variable expenses are $90 per unit and fixed expenses are $1500 per month. The
Amy Turner is the newly appointed chief accountant at Satellite Data Components (SDC), which designs and manufactures data components for the satellite and car industries. One of Amy’s early tasks
Hobby Gardens is a garden design and landscaping business. At 30 June 2021, it has a bank balance of $52500. Provided below are estimates for receipts and payments for the three months ending 30
Lavender Plantations Pty Limited produces and sells two types of lavender-based products: soaps and candles. Peta Mitchell, the manager, is implementing a new marketing strategy in 2022. Actual sales
Twilight Enterprises has provided the following estimates relating to the first quarter of 2021.The cash balance at 1 January 2021 is $24800.RequiredPrepare a cash budget for the quarter ending 31
Middleton Services is preparing a master budget for the coming year. At present senior management are reviewing the inventory policies. Which budgets would be affected by policies concerning the
Watson Company makes specially designed coffee mugs. The entity has developed a website and is trying to switch customer behaviour to this medium. Sales for each quarter of 2020 are as follows.Due to
The following financial ratios and information relate to Starbucks Corporation for the period 2008 to 2017.Required(a) Represent the 2017 horizontal analysis of the asset section of the statement of
Arthur Thomson Lawyers operates in the local neighbourhood and has six solicitors who work on client briefs. For the coming year, each solicitor is budgeted to work 2400 billable hours. The main
The following financial statements were prepared for the management of Back2Basics Ltd. The statements contain some information that will be disclosed in note form in the general purpose financial
During late 2019, Ski Lifters commenced a new business in the alpine region to rent ski gear to tourists. A budget has been prepared for the coming financial year. Prepare a brief report to
Explain the meaning of the term ‘budgetary slack’.
The treasurer of Reality Ltd has recently developed a computer model to help in the prediction of profits, statement of financial position and cash flows. By entering the expected sales figure and
Explain the benefits of preparing a cash budget for an entity.
The statement of profit or loss figures for the past five years for Victorian Manor are presented below.Using the information:(a) Prepare a trend analysis and comment on the trends(b) Prepare a
What does a favourable variance indicate?
Summary information from the 2021 statement of profit or loss of Coconut Plantations Pty Ltd is provided below.The operating expenses include $18000 of interest expense.The following amounts have
Outline six ways to increase cash inflow during periods of cash shortages identified in a cash budget.
The following table reports various financial ratios for Qantas and Virgin for 2018.(a) Given that the companies operate in the same industry, write a report explaining what the ratios suggest about
Discuss the benefits to an entity in preparing a budget for the coming financial year.
Outline the importance of strategic planning.
The market performance ratios for Unicycle Ltd are presented next. Calculate the entity’s dividend payout ratio, interpret the ratio and explain why an investor would be interested in this ratio.
Selected information for two companies competing in the catering industry is presented below.Required(a) Analyse and compare the liquidity, solvency and profitability ratios of the entities.(b) From
The statement of financial position and the statement of profit or loss for Protocol are presented below.(a) Calculate the:(i) Current ratio(ii) Return on assets (use year-end figures)(iii) Return on
Fit and Fantastic Ltd produces and sells a range of fitness equipment. Its capital expenditure for the current year for new plant was $600000 and dividends paid were $80000. Current liabilities and
Grammar Ltd reports the following information.From this information, calculate and interpret the following ratios (year-end figures have to be used because the comparative year figures are not
The statement of financial position for Ambre Ltd is presented below. Perform a horizontal analysis of the change (in absolute and percentage terms) between the year-end figures. Identify any
The cash flows below were extracted from the accounts of Martin Jones, a music shop owner.RequiredPrepare a statement of cash flows using the direct method. Repayment of loan Sale of
The following table shows the balance of an entity’s trade receivables for each of the past four years.As the table indicates, the trade receivables have increased in absolute value each year.
Solve the missing items for each independent case. The cost of sales is 60 per cent of sales revenue for each case. Sales revenue 180 000 d. 204 500 875 000 m. Cost of sales a. 102 000 g. j. 66
Explain the three methods of depreciation.
What is the main expense incurred by a retail business? Comment on how this differs to: (1) A service business; and (2) A manufacturing business.
A list of account balances for Mr Tanner’s business Robotics at the end of the 30 June 2020 reporting period is shown below. Prepare the statement of profit or loss for the reporting period, and
Explain the difference between income and revenue.
True Blue Ltd is reviewing its accounting policies and estimations. Detailed below are its current policies and estimations. Using these current policies, the company’s calculated profit figure is
Coconut Plantations Pty Ltd purchased machinery for its manufacturing process on 1 March 2019. The machinery cost $900000. Coconut Plantations Pty Ltd estimates that the machinery has a useful life
The 2017 statement of profit or loss (referred to as consolidated income statement) for Wesfarmers is provided below.RequiredUsing the above information, answer the following questions.(a) Give an
Jim St Cloud operates a wholesale clothing operation called St Cloud’s Designs. All the sales and purchases of the business are made on credit. The opening and closing balances for accounts
(a) Compare the adjustments necessary on the accounts (income or expense only) of Peter Burrows to reflect: (1) A cash-based; and (2) An accrual-based accounting system (assume the
The following ledger account shows the transactions in an entity’s cash account during the month.RequiredPrepare a statement of cash flows based on the cash account. Opening balance Receipts from
Locate the most recent annual financial statements for Samsung Group from its website. Examine the information in the report and answer the following questions about Samsung Group’s statement of
Three sisters formed a partnership, FreshGlow, to sell skincare products made from organic ingredients. They have been operating for one year. The bank balance at the end of the year is $34500. A
Consider the following transactions.• Credit purchases, $12 000.• Cash paid to suppliers, $16 000.• Credit sales, $21 000.• Cost of sales, $15 000.• Cash payments received on accounts
Compute the cash from operations in each of the following cases (A and B). All sales and purchases have been made on credit. Sales revenue Depreciation expense Cost of sales Other expenses Dividends
Smith and Jones Partnership provides specialist financial planning services to its clients. The following information relates to the year just ended.Operating expenses include depreciation of
Molly Winter Pty Ltd has the following items in its accounts.a. Bank interest received.b. Depreciation of delivery van.c. Cash purchase of office equipment.d. Sale of goods for cash.e. GST payable.f.
We made a profit of $124000, so why is there only $15000 in the bank?’ exclaimed Mr Charlton, the owner of the local fish and chip shop. Explain to Mr Charlton the relationship between profit and
Wattle Ltd has cash from operating activities of $57246. It has incurred capital expenditure of $47350, of which $33900 was for additional equipment. Calculate the entity’s free cash flow. Comment
Fresh Food Catering Ltd’s capital expenditure for the current year on new equipment was $196900. Current liabilities and non-current liabilities were $98590 and $732800 respectively. Sales for the
Tom and Clancy Partners reported a profit of $76000 for the year. The statement of profit or loss also showed depreciation expense of $8000 and a loss on the sale of a motor vehicle of $2000. The
Presented below is information for Sarah Waters, a sole trader, for the year ended 31 December 2020. Use the information to prepare a statement of cash flows. Cash balance, 31 December 2020 Cash paid
A comparative statement of financial positions as at 31 December 2019 and 2020 for Flowers Ltd is shown below.Sales for 2020 were $180 000 and profit after tax was $16350. Cost of sales was $136456.
Information for Fred and Ginger’s Dance Pty Ltd has been extracted from its financial statements and is presented below.Information relating to the year ended 30 June 2020 is as follows.Required(a)
Dick Smith Holdings Ltd was a company operating in the consumer electronics goods area. Dick Smith commenced this business in 1968. It was acquired by Woolworths during the early 1980s and was sold
Financial statements of Food and Wine Ltd are presented below.The notes from the financial statements reveal that there were no disposals of land, plant or machinery. There was a new share offer of
The most recent financial statements for the Brisbane City Council are available at www.brisbane. qld.gov.au. Referring to these statements, address the following questions.(a) Discuss why the
The following article extract refers to the ‘goodwill glob’ and implies that it produces data that lack serviceability. Clarke and Dean (2011, p. 63) outline that there will come a time when
During the global financial crisis in July 2008, National Australia Bank (NAB) was exposed to collateralised debt obligations (CDO). Consequently, NAB wrote down $1 billion associated with these
There is an IFRS on fair value measurement. The objective of this standard is to define fair value and specify the framework for measuring fair value. Identify the characteristics of assets and
Koala Furniture Ltd, an office furniture retailer and wholesaler, carries a particular brand of office chair. During the year ended 30 June, the following purchases occurred.As at 1 July, Koala
Samsung considers innovation to be crucial to its business. It values speed and exploration of new markets in order to remain competitive in a market with a constant influx of new technologies.
Flight Centre Ltd’s 2017 financial report notes that PPE is carried at cost less accumulated depreciation and any impairment charges. The notes to the accounts (pp. 48 and 81) note a gain on the
Golden Pineapples Pty Ltd had the following assets and liabilities at financial year end in 2019 and 2020.Required(a) What is the balance of retained earnings as at the end of the two financial
A friend who owns a small entity trading as Fairies Galore knows that you are studying accounting and asks you to prepare the entity’s classified statement of financial position in narrative format
Chic Frames Ltd was acquired by Specsavers for $8 million. The fair value of the net assets acquired by Specsavers was assessed at $5 million. Prepare the double-entry transaction that would keep the
From the following account balances of Frosty Pty Ltd as at 30 June 2019, prepare a statement of financial position in both the T-format and the narrative classified format. Cash at bank Accounts
From the following account balances of Platypus Pty Ltd as at 30 September 2019, prepare a statement of financial position in both the T-format and the narrative classified format. Cash at
There are four financial statements: the statement of financial position, statement of profit or loss, statement of cash flows and statement of changes in equity. Describe the information conveyed by
The statement of financial position for Daffodil Pty Ltd reveals cash on hand of $8000, accounts receivable of $48000, inventory measured at $50000 and plant and equipment measured at $116000. The
Determine the missing entries. Current Non-current assets assets $ 5000 $ 9000 7 000 5000 21000 61 000 Current liabilities $6.000 2000 9 000 Non-current liabilities $ 1400 3000 12 000 Capital
A survey conducted by PricewaterhouseCoopers in 2018 shows that 45 per cent of organisations experienced customer fraud in the last two years. Likewise 43 per cent suffered a cyber attack. The most
Go to the Tableau website (www.tableau.com). Select ‘Products’ and ‘Tableau Desktop’. Summarise the main features of ‘Tableau Desktop’ and how it can assist accountants in their daily
In Amcor’s 2017 GRI Report, CEO Ron Delia stated that ‘with our global scale, strong relationships and collaborative approach, Amcor is making improvements and breakthroughs that are raising the
One of the new opportunities for accounting graduates is forensic accounting. What does forensic accounting entail? Provide an example of a position as a forensic accountant.
Jackie Smith is considering purchasing a sushi bar in the inner Melbourne suburb of Albert Park Outline the importance of a business plan for Jackie and the type of accounting information she will
What is stakeholder theory and how is it related to corporate governance?
What are the challenges associated with digital disruption for accountants?
Give an example each of the role accounting information plays in the investment planning for a retired footballer and a retired schoolteacher.
Why has the globalisation of accounting become so important for accountants?
How does data analytics help accountants make decisions?
Explain the role of the blockchain in cryptocurrencies.
What are the six capitals that an integrated report is focused on?
What is the role of the International Integrated Reporting Council? What is its strategy?
Compare the principles underlying the GRI sustainability reporting Standards with the principles underlying the preparation of GPFS.

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